STRI: India finds OECD index for services trade faulty

India has found problems with current methodology of Services Trade Restrictiveness Index (STRI) computed by OCED as biased and counter-intuitive. It shows Indian services sector as highly restrictive in areas such as FDI.

Grievances against STRI by India

According to study commissioned by Union Ministry of Commerce and Industries has found that this index has large number problems associated with it, including some significant design issues that render it impractical for use,

For example, it show Indian services sector as one of most restrictive, particularly in policy areas like foreign entry. It is against the current reality that FDI is one of the areas that has seen maximum liberalisation in India since 1991.

STRI has both theoretical and empirical inconsistencies in its methodology. For example, change in regulatory measures in one policy area can lead to dramatic changes in another policy area which is not very useful for policy purposes.

In addition, the data of STRI seems to have been generated by rather arbitrary procedures and reflects a developed country bias,

India has approached several developing countries during recently-concluded WTO talks in New Delhi to try to build consensus around new method of measuring trade restrictiveness in services sector.

Services Trade Restrictiveness Index (STRI)

It was launched by Organisation for Economic Cooperation and Development (OECD) in 2014. It ranks countries based on their services trade policies. In 2018 edition it has covered and ranked total of 45 economies (36 OECD and the rest non-OECD) and 22 sectors. These countries and sectors represent over 80% of global trade in services.